What is a Credit Card?
Credit cards are used worldwide today as means of payment for goods and services. These small, wallet sized pieces of plastic have a card number and information on the cardholder imprinted on them. They also have a magnetic strip in which the cardholders’ information is encoded. These cards can be used in person when making a purchase or they can be used remotely for making purchases over the Internet or telephone http://en.wikipedia.org/wiki/Credit_card#Benefits_to_customers.
A credit card is an agreed line of credit that is issued to a customer from a bank or financial institution similar. The card will have a credit limit that is previously set by the credit card company. The cardholder can then spend up to that limit on the card. Every month a credit card statement will be sent to the cardholder that details the balance that has been spent on the card, available balance left to spend and the minimum payment that is due. The cardholder then has the option of paying a minimum payment to the card account. If the cardholder makes a minimum payment then the balance is held on the card and an interest charge is put onto the balance monthly for as long as it remains on the card. The other option the cardholder has is to pay the credit card balance in full every month, doing this will mean that no interest is charged.
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